BP PLC reported profit that beat analyst estimates as a strong performance at its refining division offset the effects of lower oil and natural gas prices, as well as bad weather that curbed production.
The positive result will please investors expecting a gloomy third quarter for Big Oil, as crude prices have fallen while the US-China trade dispute stokes demand concerns and US output has continued to flood the market.
“BP delivered strong operating cash flow and underlying earnings in a quarter that saw lower oil and gas prices, and significant hurricane impacts,” chief executive officer Bob Dudley said in a statement.
BP reported that its adjusted net income was US$2.25 billion in the quarter, exceeding the average analyst estimate of US$1.77 billion. That compares with profit of US$3.84 billion a year earlier, when BP decided to buy a US$10.5 billion package of US shale assets in cash rather than shares, because it was so confident that oil prices would stay high.
This year, the London-based company took the unusual step of issuing a statement before announcing earnings to flag factors affecting business in the third quarter.
The company warned of a US$2 billion to US$3 billion non-cash impairment charge from the sale of gas assets in the US and said that it would pay a tax rate of about 50 percent, higher than the expected full-year rate of 40 percent.
It also signaled that gearing — a measure of debt to equity — would remain above its target range.
Output fell from the second quarter due to the hurricane and maintenance, sliding to 3.7 million barrels of oil equivalent a day, including the contribution of barrels from strategic partner Rosneft PJSC.
Cash flow from operations including working capital, an important measure of whether BP’s shale deal is paying off, held steady compared with a year earlier at US$6.5 billion.
BP’s refining and marketing unit continued the high reliability and strong profits of recent quarters, with US$1.88 billion in the period, compared with US$2.11 billion a year earlier.
Its Whiting and Cherry Point refineries in the US processed record amounts of crude, the firm said.
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